After a similar bill failed in the Alabama Legislature last year, both the Alabama Senate and House unanimously approved a law last week designed to protect locally-owned community pharmacies, which are closing across Alabama at an alarming rate.
SB252 was approved 33-0 in the Alabama Senate and 102-0 in the House and became law after Gov. Kay Ivey signed the legislation.
SB252, the 'Community Pharmacy Relief Act,' is a response to independent pharmacies' concerns over how they are reimbursed from pharmacy benefit managers or PBMs.
PBMs are third-party administrators of prescription drug benefits in some health insurance plans. They manage prescription benefits between insurance companies and employers. These PBMs are often accused of improperly influencing patients toward certain large pharmacies, some of which are often owned by the PBMs that manage the plans.
PBM reimbursement rates for prescriptions filled at community pharmacies are often lower than the reimbursement rate paid to larger pharmacy chains. SB252 requires reimbursement paid to independent pharmacies to be at the same rates than those paid by the Alabama Medicaid Agency. PBMs will now be prohibited from adding certain fees to independent pharmacies and they are now required to forward 100% of drug manufacturer rebates to the community pharmacies that fill those prescriptions.
Rep. Jamie Kiel (R-Russellville) supported a similar bill last year that never made it past the House floor. That proposed legislation would have added a $10.64 dispensing fee to every prescription filled in Alabama. This dispensing fee was designed to protect smaller pharmacies from losing money in some cases when they filled prescriptions for certain medications.
Opponents labeled that legislation a tax, and alleged the legislation would place additional financial burdens on Alabama employers and employees.
The 2025 version, SB252, did not include the $10.64 dispensing fee. Instead, it requires the same reimbursement rate paid to large mail-order pharmacies or big chain pharmacies to now be paid to independent pharmacies.
“The legislation was filed to address how pharmacists are reimbursed by PBMs and insurance companies. We're losing rural pharmacies and people aren't receiving the medicine they need,” Kiel told the FFP last year.
The new law takes effect October 1, 2025.
Sen. Larry Stutts (R-Tuscumbia) said the legislation was long overdue and he was pleased to see strong support from both sides of the House and Senate floor.
“There have been efforts for years to rectify this situation and we've recnetly gotten to the point where support is bipartisan,” Stutts said.
Stutts, a gynecologist who co-sponsored the bill, is troubled by PBMs steering patients to large mail-order pharmacies and, in turn, charging more and paying less to independent pharmacies for filling the same prescriptions.
The Alabama Independent Pharmacy Alliance, an advocacy organization for independently owned pharmacies, reports that more than 13% of Alabama pharmacies have closed their doors since 2018, many of those having served rural communities.
Three PBMs, Optum, CVS Caremark and Express Scripts, fill more than eight of every 10 prescriptions in the country each year.
Supporters of SB252 have stated the new law will not result in increased costs to patients or increased costs to employers for group insurance, although opponents of the legislation dispute that assertion.
